Loyalty and Retention

How to Use Customer Loyalty in E-commerce to Retain Your Customers

June 1, 2020
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Earning customers is difficult, but retaining them is even more difficult though more efficient, which is why there's a call for customer loyalty.

Did you know that companies lose $83 billion every year due to implementation of bad customer retention strategies? (Neil Patel)

Whether it’s land-based or an e-commerce business, loyalty programs have always proved to be a powerful tool to retain customers.

Thus, as a company, putting an effort in its customer loyalty programs always pays off.

What is a customer loyalty program?

It’s a marketing strategy that companies implement to offer incentives and other special offers to their loyal customers. These incentives and special offers tend to motivate consumers to purchase from the same brand again.

In this article, I will present you with:

  • The benefits of customer loyalty
  • Several statistics that will leave you rethinking your marketing strategy
  • Basics of customer loyalty programs, so you can build your own!

Here we go!

What are the benefits of customer loyalty programs?

There are tons of statistics about how important customer satisfaction is as a part of your marketing strategy. Considerable benefits include:

  • cost efficiency
  • increase in customer size
  • more revenue

On the long run, loyalty programs have a huge effect on growth, from size of the customer-base to the sales. Customer loyalty programs increase sales.

Compare the kind of consumers that come and go with the ones that come to your store, buy, leave, and come back again.

If we consider the difference between the two kinds, we will definitely see that customer loyalty dramatically affects sales. It is easier to sell to existing clients. According to Adobe, loyal customers spend 67% more than new ones.

Read: These 12 Industries Get the Best Results with Loyalty Programs

Also, you attract new customers as well without spending a penny. When consumers love a particular brand, they refer it to others.

Think of Apple’s customers and how they are in love with its products. They can’t help talking about how convenient it is to use Apple products. In other words, it is best to say that loyal customers provide a word of mouth for your brand.

Loyalty programs have proven to be cost effective, especially in the marketing department. According to Adobe’s customer retention vs customer acquisition statistics, a company spends 5 times more to attract new clients than it would to retain existing ones.

Thus, you can spend your company’s budget to improve anything else by saving money from attracting new customers.

Statistics about customer loyalty

1.         “95% of customers say trusting a company increases their loyalty” - Salesforce Research

We want to trust a person when we want to build a long-lasting relationship. So do consumers. When they first meet with your brand, they need to trust you, so they can do business with you. Here comes a social proof demonstration. You need to show your brand trust to your customers. How?

You can demonstrate your brand trust by testimonials, pop ups and notifications, and user review services, and many other creative ways. The testimonials section is always a good idea to have on your landing page.

Here, your customers read your clients' impressions about your product and service, and they will get the overall idea about your brand, how the clients are satisfied with your company and this may encourage them to do business with you.

Read Want a Winning Customer Retention Strategy? Use These 4 Tips

Have you heard about social proof? These kinds of popups are used to demonstrate brand trust to a site’s visitors. Here is how it works: sales proof and social activities popups appear on a website page.

Depending on your choice, they can demonstrate how many people have purchased a certain product or how many people were recently online. Social proof popups create confidence for your visitors to rely on your brand.

Did you know that Nextsale offers customizable social proof popups alongside the exit-intent and urgency popups to increase conversion rates? You should go to their website and check out the great features they offer you with free and paid plans.

User review websites are another great way of demonstrating brand trust to visitors. You can encourage your existing customers to review your products on websites like Trustpilot.com, Reviews.io, BirdEye, Podium, and others. These services also offer free WordPress plugin and Shopify app for monitoring your brand reviews.

Did you know that Nextsale is one of our the best social proof apps on Shopify?

2.  Survey statistics show that 50% of the customers will stop being loyal if they get a better offer from your competitor. - HubSpot

Dan Ariely carried out an interesting experiment using 100 MIT students. And, the results showed that a consumer would pick an option in comparison to other prices, rather by its price itself. In the experiment, he used an advertisement that offered 3 subscription options.

In the first step, only 16% of the students chose the first while 84% chose the third option. Yes, nobody picked the second offer. Then, Dan removed the second offer and again asked another 100 students to pick an option among first and the third. Here, 68 students chose the cheaper option.

Here arises a question: if nobody was likely to choose the second option, why in the first place it was offered? The answer is that it helped the students compare the offers.

Thus, it is best to keep your eyes on your competitors. See what they do differently. Plus, you need to implement customer retention strategies that include better quality offers, as HubSpot suggests.

3.  SuperOffice conveyed a survey and found out that every 1 in 3 Americans “will stop being loyal after one mistake.”

They found out that if a brand fails to meet its customer’s expectation for once, the customer will stop being loyal despite the fact that the customer has always been loyal to that brand. Also, US companies lose $136.8 billion every year for bad customer retention programs.

What can be a mistake?

Most common customer service mistakes are over-automation, failing to listen and resolve their problems, keeping them on hold so long, etc. Customers want to contact a real person, rather than chat bot.

Thus, excessive use of automated chats can be a mistake. Also, customers don’t like to waste time on unnecessary conversation with customer support.

They have a problem and need to have a solution as soon as possible. Plus, when you keep customers waiting too much for a resolution of problems or support, you will lose them. So, it is best to respond to them within 5-7 minutes.

How to build customer loyalty?

1.        Create value

One way of adding value to your business is providing enjoyable experience. As a company, your only business should not be only selling and making revenue. HubSpot suggests creating a customer community for knowledgebase, forums, idea exchange and or host events and contents. Also, it is a great idea to find a partner to sponsor you throughout the program.

2.        Give incentives

A good reward system retains customers, and may attract the new ones. The reward system can include free offers, head starts, cashback rewards, bonuses, etc.

Let’s consider the tiered loyalty program. This program includes 3-4 bonuses, services and benefits packets, and those packets have different offers.

For instance, tiers are often named as bronze, silver, gold, platinum, and as their value increases, the benefits increase as well.

Read: Best Loyalty Programs: A List for Inspiration

3.        Send special offers and announcements

Customers want to feel special. One of the ways to do so is to send coupon codes or bonuses via email or SMS to loyal customers on their special days such as birthday or wedding day.

Another way is to inform them about upcoming discounts, new coming products, offers. It is ideal to avoid automated messages or emails when sending such content.

4.        Know your customers

Beside for sending gifts or announcement of upcoming products, you need to know your customers for several other reasons.

Here knowing is not just about their names and birthday date, but understanding what they want, what their purchasing behavior is.

It is ideal to group them based on their tastes (what kind of products they have bought so far), spending (how much money they have spent on your store within the last year) and purchasing (how do they buy? do they prefer discounts or 1+1 technique?) behavior.

Then, based on this data, you can make your offers efficiently.

5.        Improve customer interactions

Here, you need to have a multi-channel customer service system. Whenever your customers need help, your customer support or help service need to be there.

It is obvious that you cannot reply or answer instantly, for that reason you may need to share your timetable that shows your working hours. So, you don’t keep your customer on hold, they know when they can reach you.

Above are the basics of customer loyalty programs that every e-commerce business should implement.

Now, what you need to do is building your own unique loyalty program. Here are the questions you need to ask yourself when drafting your program idea:

  • Does your program have a memorable and unique name?
  • What is your program’s message?
  • Does your program create value for customers?
  • Which kind of reward system are you going to use?
  • What opportunities does your program provide?
  • How many features and enrolling options does your program have?
  • Does it seem fun and appealing for customers to join?

Read: Top 5 Points to Consider Before Creating a Loyalty Program

Wrap Up

You know that you are not alone in the market, even I can say that you are in a race. Regardless of what your niche is in e-commerce, there are always competitors, and they want to steal - not in the bad way though - your customers by better offers, better service, and products.

But there is nothing to worry about if you implement a customer loyalty strategy effectively whether you are new to the market or not.

About the Author

Orkhan Hajiyev is the Head of Growth at Nextsale. Working hard to care and deliver value for online shop owners in order to achieve success and grow, Orkhan is passionate about getting feedback from customers and likes to follow up to ensure everything is moving slowly. He is a fun guy :)

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